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Democratic senators say President Trump's plan to take a 15% cut of Nvidia and AMD’s AI chip sales to China appears to be illegal.
In a Friday letter to Trump, six lawmakers questioned the legality of his plan and urged the president to “reverse” his decision to let Nvidia and AMD export their AI GPUs to China.
“These sales to a leading adversary run counter to US national security interests, and the collection of fees appear[s] to violate US statutes and may even be unconstitutional,” they wrote.
The senators—Mark Warner of Virginia, Chuck Schumer of New York, Jack Reed of Rhode Island, Jeanne Shaheen of New Hampshire, Chris Coons of Delaware, and Elizabeth Warren of Massachusetts—point to a US export law that prohibits the federal government from charging a fee for processing or considering an export license “or other authorization or other request.”
The letter suggests that since Nvidia and AMD’s AI GPUs are classified as a controlled export requiring the US to issue a license, taking a 15% cut should be barred.
The senators did not elaborate on the unconstitutionality issue, but Section 9 says, “No Tax or Duty shall be laid on Articles exported from any State.”
Much of the letter reiterates Democrats' concerns that permitting the AI chip exports will only aid China’s AI ambitions at the expense of US national security. “The willingness displayed in this arrangement to ‘negotiate’ away America’s competitive edge that is key to our national security in exchange for what is, in effect, a commission on a sale of AI-enabling technology to our main global competitor, is cause for serious alarm,” the lawmakers wrote.
The letter demands that the White House provide details on how the US will collect payments from Nvidia and AMD, who was behind the deal, and how the funds will be used.
On Monday, Trump confirmed that the US had “negotiated a little deal” with Nvidia to permit the company to export the H20 GPU, which he called “obsolete,” although Democrats disagree.
Still, the White House has also said it’s working through the "legalities" of such an arrangement, all while hinting similar export deals could be reached with more firms.
“Well, look, right now, it stands with these two companies. Perhaps, it could span in the future to other companies,” said White House Press Secretary Karoline Leavitt on Tuesday. “The legality of it, the mechanics of it, is still being ironed out by the Department of Commerce.”
AMD didn’t immediately respond to a request for comment. But Nvidia said: "The H20 would not enhance anyone's military capabilities, but would have helped America attract the support of developers worldwide and win the AI race. Banning the H20 cost American taxpayers billions of dollars, without any benefit."
The Commerce Department previously told PCMag that, "The Trump Administration will consider any H20 license applications carefully, accounting for both the benefits and the costs of potential exports from America, and considering the views of experts across the US government.”